This copy is for your personal non-commercial use only. To order presentation-ready copies of Toronto Star content for distribution to colleagues, clients or customers, or inquire about permissions/licensing, please go to: www.TorontoStarReprints.com

As Tim Hortons pushes ahead with expansion plans at home and abroad, its menu offerings will be tailored to customers with a focus on local tastes.

“There’s no such thing as a global consumer,” said Marc Caira, Tim Hortons president and CEO, during the company’s annual meeting on Thursday in Toronto. “Consumers are local. You need to be able to adapt to the local market.”

Tim Hortons first entered the U.S. market in 1986 with its Buffalo-area store, and it has struggled to gain a foothold in the American market with fierce competition from rivals like Dunkin’ Donuts and Starbucks.

In 2013, it opened 168 new locations in Canada, 74 in the U.S., and 14 internationally.

Tim Hortons is still planning to add 500 stores in Canada in next five years, but the chain has declared the U.S. market “a must-win battle,” with plans to add 300 locations there.

Article Continued Below

“We have to be relevant to American consumers,” Caira said, adding the company will strengthen its data insights on consumer tastes. “Typically, Americans like their portions to be a little larger. They like their coffee to be on the lighter side.”

It has just launched a frozen hot chocolate south of the border along with other items including a meatball panini sandwich and spinach and egg white pie and a line of caramel crunch baked goods.

Tim Hortons has even created a new unit based in Columbus, Ohio, where items are being developed and tested.

“I think that was part of the problems of the past,” Caira said in an interview after the meeting. “Perhaps, we relied too much on Canadian thinking, Canadian products for the U.S. consumer. And that’s wrong.”

In another change, Tim Hortons won’t be directly investing as much into the U.S. market.

“We have always expanded by building the restaurants ourselves, putting our own capital in,” he said. “We’re now going to partner with different people that want to do business with Tim Hortons, and there are lots of them. We’re going to use their capital.”

That’s the model that the coffee chain has used in Persian Gulf region, partnering with the Apparel Group, which had expertise in real estate and media. “They run the business. They put the capital in, and we collect the royalty,” Caira added.

In February, Tim Hortons announced four development agreements for nearly 100 outlets over five years in Missouri, Ohio, Indiana and North Dakota. It announced this week it has fifth deal for 15 to 20 locations in Pennsylvania and West Virginia area.

“There is no lack of interest from people who want to take our brand into different parts of the U.S.,” he said. “It’s like a marriage. We have to be careful that we align ourselves with the right partner.”

At the same time, Tim Hortons, which already dominates the Canadian coffee market where 8 out of 10 coffees are sold at the chain, is looking at ways to boost revenues such as introducing new items and more combos.

That way, the company can generate more revenue per customer – an upsizing of sorts.

“There is nothing fundamentally wrong with this company,” said Caira, who took over the top job 10 months after working for Nestle and Parmalat. “We’re in this new era, which is an environment of low-growth.

“Low growth gives you competitive intensity,” he said. “What’s going to drive growth in this environment?

“You can try stealing share from others, but in our case, we have most of the share anyways,” said Caira, who sees innovation as the key to growth, such as new premium products.

The restaurants have added more variety including things like smoothies and frozen green tea. It brought in hash browns that can be bundled to breakfast combos, to boost average checkout amounts. It is also introducing kettle chips, which are expected to do well at lunch, a target area for growth.

Tim Hortons recently cut less popular items like the walnut crunch donut and double berry muffin as well as eliminating Cold Stone Creamery ice cream outlets in Canada, which resulted in a $19 million hit.

Caira said as new products are introduced, at the same time, “you have to keep pruning the tree.”

More from the Toronto Star & Partners

LOADING

Copyright owned or licensed by Toronto Star Newspapers Limited. All rights reserved. Republication or distribution of this content is expressly prohibited without the prior written consent of Toronto Star Newspapers Limited and/or its licensors. To order copies of Toronto Star articles, please go to: www.TorontoStarReprints.com